Case study 4: Veterans Health Administration

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Part of Time to Think Differently

In the second half of the 1990s, under new leadership, the US Veterans Health Administration (VA), underwent a radical transformation from an inefficient and unresponsive public health care system to an organisation that was widely admired for its ability to provide high-quality care at an affordable cost.

The changes involved decentralisation of decision-making and accountability, moving from a fragmented, hospital-centred system to a series of regionally based integrated service networks (led by network directors). This enabled the VA to reduce the use of hospitals beds by over 50 per cent, and reinvest the savings in primary care and care in community settings.

How did it achieve this?

Over a five-year period, the VA made some major changes. These included:

  • agreeing a new vision
  • implementing an organisational structure (in the form of integrated service networks) to achieve this vision
  • appointing the right people to make it happen.

One important feature that is particularly relevant to the NHS was the willingness of the VA’s national leaders to support regional network directors in closing hospitals where appropriate in order to release resources for reinvestment in services in the community, even in the face of opposition from politicians.

The VA introduced a performance management approach, setting measurable goals for improving quality and outcomes. Senior VA leaders and network directors met regularly to discuss performance on key indicators. The organisation also promoted a culture of measurement and reporting across all levels of staff. It aimed to strengthen leadership at every level, devolving responsibility for implementing improvements to managers at different levels, replacing the previous system of micromanagement. It also introduced financial and non-financial incentives to support quality improvement, including transparent reporting of comparative performance.

What does the VA’s story tell us?

It shows the importance of clinical leadership and the value of investing in staff to provide them with the skills needed to bring about improvements. The VA engaged clinicians by focusing the improvement programme on patient safety, quality of care and outcomes rather than financial performance and efficiency, on the basis that this would resonate more effectively with them. Clinical leaders were also supported by investment in information systems that provided them with the data needed to both manage operations and bring about improvements in care. Care was standardised around best practice to reduce the wide and unacceptable variations in quality that had pervaded the VA up until then.

The importance of using complementary approaches

The VA’s experience also demonstrates the importance of using complementary approaches to bring about change, rather than opting for either a top-down or bottom-up approach. It highlights the importance of setting a clear direction for the organisation as a whole while devolving responsibility for implementation. One of the most important complementary changes was to ensure continuity of service delivery during the transformation.

Learning from the VA, much more could be done to measure and report openly on the performance of NHS organisations as a way of supporting quality improvement.

The journey to high performance is never one way

The VA has experienced major challenges in holding onto the gains made during its transformation. Recently, these challenges have included lengthening waiting times for treatment and concerns about variable quality of care, resulting in a change in leadership. This is an important reminder that the journey to becoming a high-performing health care organisation is rarely linear and never one way. It does not, however, invalidate the lessons identified above from its remarkable transformation in the 1990s.